Prepared remarks
Morning, everyone, and welcome to the Delta Air Lines June Quarter 2026 Financial Results Conference Call. My name is Matthew, and I will be your coordinator. At this time, all participants are in a listen-only mode until we conduct a question-and-answer session following the presentation. As a reminder, today's call is being recorded. If you have any questions or comments during the presentation, you may press 1 on your phone to enter the question queue at any time. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.
Thank you, Matthew. Good morning, everyone, and thanks for joining us for our June 2026 earnings call. Joining us from Atlanta today are our CEO, Edward H. Bastian; our Chief Operating Officer, Daniel Janki; Chief Commercial Officer, Joe Esposito; and our Chief Financial Officer, Erik Snell. Edward will open the call with an overview of Delta's performance and strategy. Daniel will cover the operation, Joe will provide an update on the revenue environment, and Erik will discuss costs and our balance sheet. After the prepared remarks, we will also take analyst questions, and we ask that you please limit yourself to one question with a brief follow-up so that we can get to as many of you as possible. As a reminder, today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those forward-looking statements. Some of the factors that may cause such differences are described in Delta's SEC filings. We will also discuss non-GAAP financial measures; all results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I will turn the call over to Edward.
Thank you, Julie. Good morning, everyone. We appreciate you joining us today. This morning, we reported our June quarter results, and it is clear that Delta's brand and industry position are stronger than ever. We generated record revenue which grew 14%, increasing more than $2 billion over last year. This reflects sustained strength in demand and momentum across our diverse business. We delivered pretax profits of $1.4 billion, earnings of $1.56 per share, and an operating margin of 9%. All were better than the guidance that we provided at the start of the quarter. Return on invested capital was 11%, well above our cost of capital. So through the first half, we generated $1.4 billion of free cash flow, fortified our investment grade balance sheet, and announced a 15% increase to the dividend. And most importantly, we kept investing to make travel safer, easier, and more enjoyable for our customers. Our people are what truly set Delta apart. They delivered industry-leading performance across key operational metrics, and we also earned Delta recognition as the best U.S. airline for the eighth consecutive year. Our people are our number one competitive advantage, and I want to thank the Delta team for their commitment to delivering for our customers every day, particularly during the busy summer travel season. In May, we announced a 4% pay increase and we have accrued nearly $500 million towards next year's profit sharing payout for the first half of the year. Both reflect our long-standing commitment to sharing success with the people who drive it. Turning to the current environment, the U.S. economy remains resilient, supported by strong employment, rising household incomes, and significant wealth accumulation. Our customers are prioritizing experiences, investing in the moments and connections that matter most to them, driving sustained strength in demand for air travel. These trends align well with Delta's strategy, demonstrating the loyalty that we are seeing across customer segments and powering high-margin, diverse revenue streams that enhance the resilience of our business. Our Delta American Express partnership is a clear example of the strength of our loyalty ecosystem. Card spend has grown double digits for the past seven quarters with particular strength among our premium Reserve cardholders. With continued momentum in both new card acquisitions and spend, we expect remuneration of $9 billion this year, up 10% over 2025. As I stated in April, high fuel prices have proven to be the most powerful catalyst for change in our industry, and this year that has once again been the case. Coming into the recent fuel spike, most U.S. carriers were already struggling to earn their cost of capital against a backdrop where industry airfares have meaningfully trailed inflation, costs have reset higher, and consumer preferences have evolved. As we predicted, structural change has accelerated, enabling the industry to recapture this year's fuel cost inflation at the fastest pace of any recent cycle. Even after recent fare increases, airfares remain 10 to 15 percentage points below overall inflation since COVID. With continued fuel volatility, and much of the industry still earning returns below its cost of capital, we believe current revenue momentum should remain sustainable even if fuel prices moderate. That is an important step toward improving the industry's financial health and earning sustainable returns over time. For Delta, we are executing on our strategy from a position of strength. With continued revenue momentum, measured capacity, and a more stable fuel environment, we expect to return to earnings growth on double-digit operating margins in the second half of this year. For the full year, we are affirming the guidance that we set at the start of the year even with a multibillion-dollar fuel headwind. Our outlook for earnings of $6.50 to $7.50 per share represents growth of 20% year over year. And our free cash flow outlook of $3 billion to $4 billion brings our three-year cumulative total to over $11 billion. Looking beyond 2026, we are confident in our long-term financial framework and path to mid-teens margins and return on invested capital. The strength and consistency of our results give us the ability to keep investing and innovating to extend Delta's lead, elevating the experience and creating a more seamless and personalized travel journey. As we invest in the areas that customers value the most, loyalty to Delta continues to grow. Last month, we opened our second Delta One lounge at LAX, bringing the Delta One lounge network to five locations and expanding the industry's largest club and lounge footprint. Our Delta American Express co-brand card continues to lead the industry, and our recent portfolio enhancements are strengthening the value proposition for both existing and prospective cardholders. We are also making the journey more seamless through Delta Sync Concierge. Our AI-powered digital assistant is now available to more than half of Fly Delta app users with a full rollout later this month. This year, we continue to set the standard on connectivity. Fast, free Wi-Fi is already available to members across nearly our entire fleet. Satellite upgrades are coming online in the months ahead to deliver even faster speeds and broader global coverage. Starting in 2028, Amazon LEO will unlock the next generation of onboard connectivity, reach, and personalization. In closing, our performance now reinforces the durability and the differentiation of the Delta business model and our investment thesis. Looking ahead, I am incredibly optimistic about Delta's future and our opportunities to deliver even better performance for our employees, our customers, and our owners. Now, Daniel will cover our operational results.
Thank you, Edward. I want to begin by thanking the Delta team for the outstanding service they provide to our customers every day. Operational excellence is core to the Delta brand, and it is the experience our customers expect. Our culture of continuous improvement—the spirit of 'keep climbing'—drives us to get better every day. This, combined with continued investment in technology and data, better positions our people to run a great operation, improving reliability and efficiency. During the quarter, we extended our industry leadership in on-time arrival and departure performance while strengthening operational metrics across our system. Completion factor improved through the quarter. We expect continued progress into the second half as targeted actions we have taken to improve resilience gain further traction. We delivered record baggage performance led by our largest hub in Atlanta, where performance has improved meaningfully from last year's strong baseline. This was supported by enhancements to our baggage handling system and processes, and our patented baggage AI technology. Delta continues to lead large U.S. carriers in domestic Net Promoter Scores, improving over last year. This was driven by the outstanding service of the Delta team, with people interaction scores reaching all-time records across the global system. This includes year-over-year improvement across airport customer service, reservations and care, flight attendants, and our pilots. This performance reflects the focus of our people and reinforces how we are making travel easier and more reliable for every customer. We are continuing to invest in technology while empowering our people to deliver more proactive communication directly to customers. We are also enhancing digital tools with a simplified rebooking process, expanded self-service, and continued rollout of Delta Sync Concierge. Our customers are noticing; this has driven more than a 25-point improvement in NPS during periods of irregular operations. A more reliable customer experience starts with a more reliable fleet, and our Delta TechOps team is central to that. Key fleet reliability metrics—including aircraft out-of-service levels, maintenance-related delays, and cancellations—all improved versus prior year, benefiting from predictive maintenance capabilities and the investments we have made in fleet resilience over the last few years. Beyond supporting our own operation, TechOps represents an exciting opportunity to further diversify our revenue through a growing third-party MRO business. This year, we remain on track to generate approximately $1.2 billion in revenue, up nearly 50% from last year, with low double-digit margins. Over the next several years, our technical capabilities, coupled with our strong customer relationships and record backlog, position us to more than double MRO revenue while expanding margins. Now I will turn it over to Joe to cover our commercial results and outlook.
Thank you, Daniel. June quarter results reflect strong execution and our clear prioritization of managing for margins. Total revenue of $17.7 billion was at the high end of our expectations, up 14% over prior year on approximately 1% capacity growth, driving total unit revenue growth of 12.4%. We are focused on continuing this revenue momentum to fully recover this year's fuel cost pressure and improve margins as we move through the back half of the year. Domestic-led unit revenue growth was up 12.4%, driven by higher yield. International grew 8% over prior year, led by Latin America. Importantly, main cabin trends improved through the quarter, with main cabin unit revenue growing mid-teens in the month of June. Across corporate sales, all sectors posted double-digit growth. Performance was strong across core and coastal hubs, where sales rose more than 20% versus prior year. Diverse revenue streams represented 61% of total revenue in the quarter, up two points over last year, with premium and loyalty revenue both up nearly 20%. Cargo revenue grew 39%, primarily on volume, and MRO delivered revenue growth of more than 30% year over year driven by legacy engine platforms. Now turning to outlook: demand remains strong and broad-based. Cash sales improved through the quarter across the entire booking curve, in both premium and main cabin products. These trends, combined with our measured approach to capacity growth, support the sustainability of yield strength. We expect the September quarter revenue to grow mid-teens versus last year. Total unit revenue growth is expected to improve sequentially even against more challenging prior year comparisons. And while it remains early, December quarter bookings are coming in strong, giving us confidence that this revenue strength will extend through the fourth quarter. Capacity for the third quarter is up 1%, while fourth quarter is planned to be up 2% to 3%, led by international. Our integrated commercial strategy is how we will continue to deliver a revenue and margin premium to the industry. We are expanding our global network through new routes and joint-venture partnerships while continuing to renew our fleet, enabling us to grow the network more profitably. We are also improving the product and giving customers more choice. The rollout of Basic, Classic, and Extra offerings in Delta Comfort+ is now complete and will be expanded across all premium cabins this quarter. These offerings increase flexibility for customers while driving improved revenue performance. Loyalty remains one of Delta's most valuable assets. SkyMiles membership growth is outpacing capacity, led by double-digit gains among Gen Z members. That engagement is translating into durable revenue best illustrated by our industry-leading co-brand performance. In closing, these investments reinforce our competitive advantage and give us more ways to grow revenue, deepen loyalty, and expand margins over time. I will now hand it to Erik to discuss our financial performance.
Thank you, Joe. I want to start by recognizing the Delta team for delivering strong Q2 results. We generated $1.4 billion of pretax profit with an 8.8% operating margin despite the highest fuel costs in our history, reflecting the structural advantages we have built in the business. Total fuel expense was $4.4 billion, up nearly $2 billion versus last year. Fuel price per gallon averaged $3.93, including a $0.11 refinery benefit, net of a $0.05 impact from a temporary outage. Fuel price came in better than guidance as lower crack spreads more than offset the reduced refinery benefit. The refinery is a strategic advantage for Delta, providing a meaningful offset in a high crack environment, and we expect 2026 to be one of its most profitable years. Non-fuel unit costs increased 6.8% over prior year in the June quarter, reflecting higher crew and revenue-related costs on capacity growth several points below our initial plan. Through the first half, we generated $4 billion of operating cash flow and $1.4 billion of free cash flow after $2.6 billion of reinvestment. The investments we are making are further compounding our advantages. The durability of our performance allows us to invest year after year in our employees and in elevating the customer experience, all while continuing to pay down debt. Our balance sheet is the best in Delta's history: investment grade ratings from all three major credit agencies and a substantial and growing base of unencumbered assets and secured borrowing capacity. We ended the quarter with adjusted net debt of $13.6 billion, down from year end. While much of the industry raised additional capital, debt reduction remains a top priority and we expect gross leverage to reach 2x by year end. As we move toward our long-term target of 1x, we remain committed to increasing shareholder returns. Turning to our outlook, we expect September quarter non-fuel unit cost performance to improve modestly, with further progress in the December quarter as operational investments continue to gain traction and capacity growth begins to normalize. This puts us back on a path toward our long-term framework of low single-digit unit cost growth. Our outlook assumes an all-in fuel price of approximately $3.50 per gallon including a $0.05 refinery benefit. Total fuel expense is expected to be about 40% higher than last year. Combined with our mid-teens revenue growth outlook, we expect a Q3 operating margin of 11% to 13% and earnings per share of $2.20 to $2.50, up meaningfully from $1.70 last year. In closing, the affirmation of our full year outlook from the start of the year and our ability to grow earnings despite a nearly $4 billion increase in fuel cost reinforces that Delta's durability continues to improve relative to prior cycles and to the industry. Delta's differentiated strategy and consistent execution across dynamic environments give us confidence in delivering our long-term financial framework and creating sustained value for our owners. We will now move to Q&A. Julia, please open the line for analyst questions.
Matthew, can you please remind the analyst how to enter the call queue?
Questions and answers
Certainly. At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. We do ask that all Q&A participants please limit to one question and one brief related follow-up question. Once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Conor Cunningham from Melius Research. Your line is live.
Hi, everyone. Thank you. Joe, I was hoping to start with you. Can you just talk a little bit about the progression in unit revenue throughout the second quarter? I am trying to get a sense from the difference between the revenue production that you saw in April versus June, just given the mix dynamic as you were more exposed to the higher fares. I'm not asking for monthly detail; just trying to understand the spread a little as we get more comfortable with the second half outlook on revenue. Thank you.
Yes, Conor. It is one of the things that gives us confidence as we go into the back half and especially the third quarter. Our exit rate on TRASM was significantly higher than our entry rate, and that goes to how our fuel recapture strategy moved the quarter. We started it in May, and in April we were already about 70% booked. Each month, you get more and more of new priced revenue that comes through the system. So again, it was significantly higher as the exit rate for both premium and main cabin, and that is what gives us confidence toward our guide for the third quarter and the back half of the year.
Okay. Thank you. And then Ed, maybe bigger picture. It seems like you view the industry being a little different on how they price going forward given the changes that we've seen. You did not explicitly guide to fourth quarter, but rough math suggests that you expect pricing to remain firm from here. I'm trying to understand what gives you confidence that this momentum is sustainable. Thank you.
Yeah. I think it gives us a lot of confidence that we are going to hold on to the pricing environment and the revenue momentum. The industry has no other choice. Inflation across fuel and non-fuel is significant, and fuel prices are still elevated. That is why we have confidence in holding on to revenue with a modest capacity increase as well. Our forward cash sales, if you look at cash and bookings, are higher than our close-in, and that is what we want to see when we think about confidence for the back half, for greater than 90 to 120 days. Then as you get into the fall for Delta's network, we are much more of a business-oriented network in a post-summer environment, not only for domestic but for international. So that is where our confidence comes from in the back half.
Thank you. Your next question is coming from Mike Linenberg from Deutsche Bank. Your line is live.
Oh, yeah. Hey. Good morning, everyone. Edward, this one's for you. By all measures of market share, it looks like the low-cost, low-fare carrier group is in a bit of a secular decline. You've been around for some time—what are your thoughts? One concern among investors is that carriers from that group could come in and undermine pricing as energy prices come off. Your thoughts, please.
Sure, Mike. What we have seen is not just this quarter; it has been building for the last several years. There have been significant structural changes to the overall industry landscape. The last time fuel moved around with a lot of volatility was maybe nine or ten years ago, and back then low-cost carriers were the darlings of the industry with high margins and growth rates. They treated fuel as a competitive advantage because they had lower costs in other areas, and some, like Southwest, had fuel hedges in place. None of that exists any longer. The world has changed completely. No one has fuel hedges of any note today. The cost of production—not just fuel but labor, airports, technology—is up. Planes are harder to get, and if you can get them, costs are higher. So you need to change the business model to build resilience in pricing durability, and that is what we have done over time. That includes not just higher airfares but revenue diversification. That is why our American Express relationship is so important to us, why corporate travel leadership matters, why international growth matters, and why MRO and cargo matter—all of which are growing double digits. We have built this and wrapped it around an experience that is substantially better today versus ten years ago and the opportunity we have with technology to become world-class merchandisers and retailers. Ten years ago we were a blunt instrument with only a few price categories. Today we continue to add to that. So what we are seeing is no surprise to Delta. Others following our lead is also no surprise. I mentioned this morning that even with industry pricing improvements, the low end of the market still has to increase fares by another roughly five percent, by our estimate, just to get to breakeven at today's fuel environment. There is nothing to be gained by trying to grow in that environment. The opportunity is in securing higher revenues, not higher market share.
Just a quick one for Daniel. You talked about committed actions you were taking to improve operations and that numbers improved through the quarter. Is there anything on the staffing side or fleet side causing issues this quarter?
Thanks, Mike. On the fleet side, you have to be systematic about continuing to invest and put resiliency in. Our teams have continued to get better. We still have opportunities to improve, and much of it is capturing data, moving to more predictive maintenance, staying out in front of issues, and continuing to work them. We've seen improvements in the reliability metrics. On the staffing side, we have actions around resiliency and capability in our crew resourcing—more people, processes, and technology to get better utilization of those resources. We will continue to make progress on that front.
Your next question is coming from David Vernon from Bernstein. Your line is live.
Hey, good morning and thanks for fitting me in. A question regarding CASM ex outlook: you made comments about cost moderating as growth normalizes. Can you talk about what that means for 4Q and maybe early next year, ASM growth, where in the network you are looking to add capacity, and where in the marketplace you see opportunities to put capacity to work that is compensatory given oil? Thanks.
Yes, David. It's premature to give guideposts for 2027, but I can share how we think about the near-term setup. We came through a period with muted capacity as an obvious response to the dramatic fuel spike. Fuel remains elevated—about 50% higher than where we started the year—and crack spreads are likely to be sticky. I would anticipate that in the fourth quarter you will see us return to a more normalized capacity run rate, the 2% to 3% range that we've historically targeted. That keeps us roughly in line with economic growth. Looking into 2027, our mindset is to stay in our lane: focus on Delta's strategy rather than competing on someone else's. Growth for the back half of the year into the next couple of years will be largely in two areas: upgauging and international. We've taken a holiday from upgauging over the last couple of years due to fleet constraints, but as we take delivery of Max 10s and other narrowbody opportunities, we'll reintroduce mid-gauge growth—an efficient way to grow. Second, international growth is focused: new markets in the Middle East such as Riyadh, bringing Tel Aviv back, and expanding in Asia. That's the outlook for growth for the next year or so.
That is helpful. Quick follow-up on the MAX 10 and MAX 7 deliveries: do you think delivery of constrained aircraft could upset the better structural environment we are seeing, or does that not factor in your consideration?
It absolutely factors in. One of the fuels that powered the low-cost evolution was being able to grow faster than costs. The aircraft availability environment has dramatically changed; it's not just whether Boeing and Airbus can produce aircraft but also issues with engine production and durability of new engine technology. Availability of aircraft is a significant constraint. For us, we're looking forward to getting the Max 10, which we expect to see in Delta colors next year. That will enable us to retire older narrowbodies such as 717s and 757s and be more efficient.
Your next question is coming from Andrew Didora from Bank of America. Your line is live.
Hi, good morning. Joe, a question on international: if we were sitting here in May, much of your Q2 international was on the books versus Q3. Should we expect a better sequential improvement internationally because of that booking-curve dynamic? Any geography-specific comments would be helpful.
Good morning. That's exactly right. Long-haul international typically has about 15 points more bookings than domestic at that point in time. In April and May, transatlantic bookings were already substantial because customers book transatlantic travel earlier in the year. So you'll see sequential improvements as we move through the next quarter and into the fall. Business travel also improves significantly in the transatlantic in September and October. For the regions: transatlantic will still have a very solid summer and seasonality is flattening, which helps. The Pacific has kept up with capacity and unit revenues were up about 8% on similar capacity. We added new markets this year, such as Hong Kong, and are annualizing markets like Melbourne and Los Angeles-Shanghai. Asia and the Middle East will be a focus over the next couple of years. Latin America is two stories: South America has been very strong over the past 18 months and looks good forward with LATAM partnership; Mexico has been softer due to incidents earlier this year but should improve into Q4. Our capacity in Latin America was down 7% with most of that in short-haul categories; we'll bring some back based on demand.
Very helpful. Follow-up on cabin segmentation you announced earlier this week: how far can this go? Are there further opportunities to expand this a la carte option and how do you view those options over the next three to five years?
We are still in the early stages of segmentation. We expanded main cabin several years ago, rolled Comfort+ segmentation recently, and are launching into premium products now. There is a lot of opportunity. It benefits the consumer and it benefits revenue and upgrades. It gives customers more choice. Over time you'll see us retail all products in those categories and reward our best customers with better offerings. Today it looks like classic revenue management merchandising, but with our brand strength you can see a future where retailing and personalization are merged deeply into the experience.
Your next question is coming from Tom Fitzgerald from TD Cowen. Your line is live.
Hi, everyone. Thanks for the time. Regarding cargo, can you unpack the strength in Q2? Was it spot prices, fuel surcharges, or fleet investments? Should we expect cargo to decelerate into the back half or continue strong?
Most of the strength in cargo revenue was on volume. We've seen rerouting of cargo that typically goes through the Middle East, and we've been able to recapture much of that. It's also the structural improvements we've made internally and the investments we've made in capability. Asia is one of the largest cargo markets from the U.S. and we've been expanding our capability there. We've restructured how we approach cargo and made it a much higher priority. We'll see strength throughout the year; probably not 39% again, but we expect a really strong back half in cargo and it will play a bigger role as we invest in international.
Okay, thank you. On MRO, can you provide the latest thinking on margin trajectory over the back half and the next couple of years? I know the long-term target is mid-teens.
Sure, Tom. Mid-teens is our target. We expect to expand margins a couple hundred basis points a year. The first half of this year was better given the volume leverage in revenue growth. I would expect the business to go from around low double-digit margins toward mid-teens over time with double-digit revenue growth, and a couple hundred basis points of margin expansion per year is the progression to expect.
Matthew, we can now go to our next question.
Certainly. Your next question is coming from Jamie Baker from JPMorgan. Your line is live.
Hey, good morning. This is for Ed. I'm curious what internal analysis you've done to assess what peak pretax margins might look like for Delta in the coming years. Hypothetically, if the industry did, say, a much higher pretax margin environment, what structural peak might Delta be capable of? I'm not expecting a specific number, but what sort of thought and analysis have you put into this?
Thanks, Jamie. I'm not sure what a peak looks like, and we're not there yet. But our framework we shared a couple of years ago outlined a path to sustainable mid-teens margins and ROIC. A peak environment might be a bit higher than that. When we laid out the assumptions, we considered structural change in the industry and the discipline needed in light of high costs—fuel, labor, aircraft availability, airports. We are competing more on value than price—experience and service—and that is where Delta wins. We continue to pursue efficiency opportunities, like upgauging with A321neos and narrowbody strategies; we have a long way to go. The sustainability of what we are building—customer loyalty, brand strength, diversified revenue streams—makes this more durable than past cycles. Also, technology and AI will enable us to grow and be more efficient. It may take a year or two to see a meaningful imprint from that, but it will not be small. We are focused on the consistent execution of the strategy, and that is why we believe mid-teens margins are durable and sustainable.
And a quick follow-up on segmenting premium cabins and Delta One: basic economy succeeded in part because many corporations forbade its use for business travelers. Do you expect a similar corporate response to the basic premium fares—will corporations wall off the most restrictive premium fares?
When we rolled segmentation into Comfort+, we applied similar corporate restrictions as we did with main cabin. We expect a similar approach with the premium cabins; not all fares will be allowed on every flight. We'll use restrictions based on demand by flight and market. This should be positive for the top-end consumer as you add more flexibility and preserve higher-value premium products, because the basic premium fares are more restrictive and don't align well with many corporate travel policies.
Your next question is coming from Brandon Oglenski from Barclays. Your line is live.
Hi, good morning and thanks for taking the question. Erik, if we translate your RASM and expectations for low single-digit CASM, you're getting close to that mid-teens operating margin goal. How do you think about unit cost inflation in 2027 and beyond, and how will you manage through new labor contracts and similar items?
Thanks, Brandon. We expect modest progress on unit cost as we go forward, mainly from the operational improvements Daniel discussed and better resilience. We saw exit-rate improvements in the quarter, and with normalized capacity growth and those operational gains, we'll hit our long-term framework of low single-digit unit cost growth. It will depend on next year's capacity setup. We already have most costs in our baseline; we're top of the industry on pay scales, and our generational airport improvements are in the baseline. Our ability to outperform going forward should be strong when we get back to low single-digit CASM growth.
Quick follow-up: you've talked about resiliency in staffing this year. Could that be a tailwind into 2027?
Yes, we have put in many actions that take time to mature. We are seeing the fruits of that labor across crew resilience and other efficiency actions. As growth returns, you will see leverage on those investments. In Q2, with growth below our plan, resources were roughly flat versus growth. As growth comes back, we expect to capture real leverage—two to three points—from better utilization of resources and the investments we've made.
Your next question is coming from Ravi Shanker from Morgan Stanley. Your line is live.
Great, thanks and good morning. Daniel or Joe, can you give some color on load factor by cabin and how you're balancing load factor versus preserving RASM as we go into the back half?
Ravi, during peak summer loads are highest for the year. Paid premium load factor has been very strong and growing; main cabin load factor is fairly consistent with last year. Our capacity mix is changing: premium capacity is up low single digits while main cabin is down two to three percent. That mix helps us sell a higher load factor in premium cabins and supports unit revenue strength.
Quick follow-up: forgive me if I missed this, but what is the current status of the refinery after the outage, and if it is not fully back up yet, what is the timing?
The refinery had an outage a couple weeks ago that was a $0.05 hit in Q2. We are back up to approximately 75% throughput of the product that goes through the refinery, but there will be a tail of the outage into Q3; that will be about a $0.05 to $0.07 hit in Q3. Net of that, we still expect the refinery to deliver a $0.05 benefit in Q3 based on current forwards, and that benefit would increase into Q4.
Your next question is coming from Duane Pfennigwerth from Evercore ISI. Your line is live.
Thanks, good morning and nice results. One question: did events like the World Cup benefit the domestic business disproportionately or keep more demand in the U.S. this summer, perhaps boosting premium demand? And longer term, which entities are best positioned for next summer?
There are lots of events throughout the year and the World Cup is large, but it's not significant enough to make a huge difference to the quarter overall. We see it flight by flight dependent on game locations and you get closer-in demand for unscheduled games. We didn't deploy a lot of capacity specifically for the World Cup this year; the additions we made are small compared to our overall network.
I'd add that the U.S. has done a great job of welcoming visitation, and the World Cup has been a strong advertisement for coming to the U.S. I think it will have some impact on inbound visitation and enhance the mix next year. While it may not change specific market choices, it should enhance inbound participation.
If I could sneak one more in on the co-brand card acceleration you noted: can you talk about the drivers and whether there's any geographic push behind that acceleration? Thanks.
American Express is a great partner and very aligned with our strategic vision. When we go to market, whether expanding internationally or in U.S. cities, AMEX is critical to our ecosystem. The growth in cards and spend is complementary to how we are both growing. It's not just transactional; it's a true commercial partnership. We expect continued growth, another million cards per year in our sights this year and about $9 billion of remuneration.
One of the benefits of our relationship with American Express is the exclusivity and the alignment. We are leading consumer brands with the same demographic focus. We are a significant contributor to AMEX's distribution and revenue spend, and they are our number one partner. The combined strategic and marketing alignment is very powerful and continues to compound year after year.
Your next question is coming from Catherine O'Brien from Goldman Sachs. Your line is live.
Hey, good morning everyone. Thanks for the time. I wanted to dig in on the corporate strength. Back in January you saw pickup in corporate volumes after a long period of stable volumes. Can you break down how much of the double-digit corporate sales growth is fare growth versus volume? And if volumes pick up, how meaningful could that be to premium cabin pricing given continued strong demand from high-end leisure travelers?
Hi, Catherine. Most of the 20% corporate sales growth has been on the fare side. We've seen some improvement in passengers; a lot of the improvement has been in international. It varies by city, but most of the increase has been driven by fares rather than volume. There is upside from additional volume in the future and we've seen resiliency in corporate demand.
Okay, great. Quick follow-up on premium and main cabin trends: could you give color on premium versus main cabin RASM growth in Q2? Given tougher comps in premium and reduction in low-cost capacity this year, are you anticipating main cabin RASM could outperform premium in Q3, or how should we think about that given Delta's approach to main cabin seats?
In Q2, main cabin unit revenue actually exceeded premium on a unit-revenue basis in part because we are down in main cabin capacity. The industry removed a significant amount of unprofitable low-cost capacity—ultra-low-cost capacity is down about 30%—so main cabin has gotten healthier. We've also not grown main cabin seats for several years and will not next year. Premium revenue has been up 17% and unit revenue growth in premium is below main cabin, but premium capacity is up low single digits and premium revenue growth is outstripping capacity. We're getting into a good balance between main cabin and our premium cabins.
Your next question is coming from John Godyn from Citigroup. Your line is live.
Hey guys, thanks for taking my question. Edward, you're the longest-tenured CEO in the industry and have seen a lot. You're not lightly guiding to what looks like a very strong Q4. Can you put everything in one place: how the slow and consistent industry changes, compounded with Delta's actions, set up this situation? Why should we have confidence this inflection is not a head fake and will be sustainable beyond year-end?
Sure, John. The results and our forecast into the back half of the year are consistent with what we've been previewing for some time. We aimed to break the commodity cycle and move to a premium strategy—decommoditization—building a sustainable business model that generates returns for customers, employees, communities, and investors. The structural change in the industry requires discipline given higher costs in fuel, labor, aircraft, and airports. We're competing on value and experience where Delta wins. We're focused on efficiency and upgauging, and we have opportunities still on fleet efficiency. The consistency of the strategy, a leadership team with long tenure, and alignment across our 100,000 employees—focused on service—create a durable advantage. This is about who serves best and who creates the best experience. I believe what we're building is durable and sustainable, and I don't see an end in that.
Fantastic. I'll leave it at one. Thanks.
We will now go to our final analyst question.
Certainly. Your final question is coming from Savanthi Syth from Raymond James. Your line is live.
Hey, good morning. With your focus on international over the next few years, how do you see long-term capacity growth between the domestic market and international markets? I'd like a finer point on where you see opportunity.
Long-term, we expect international to grow faster than domestic for us because there are many economies we do not yet serve. Domestic growth will more closely follow the economy and be driven by efficiency—upgauging and better utilization of hubs. We will grow in certain U.S. cities faster than average where there are premium markets, like Los Angeles and Austin. International growth will be focused on Asia and the Middle East, expanding into destinations our customers want to travel to and where we don't yet have service. Our joint-venture partners are foundational to our profitability and strategy in those regions, and we have strong partners such as Korean Air and LATAM to help us expand access.
Does that put Europe and Latin America somewhere in between?
I would say Europe is similar to domestic in that efficiency matters: newer aircraft like the 787 replacing 767s deliver significant efficiency and margin uplift. On long-haul widebodies, gauge and cargo capabilities multiply revenue and margin. South America still has opportunities with LATAM, where hubs like Lima, Santiago, Sao Paulo, and Bogota are developing. Our joint-venture and partnership approach sets the foundation in those regions.
Okay. With that, that will conclude our second quarter earnings call today. Thank you everyone for joining us, and have a wonderful weekend.
Thank you. That concludes today's conference. Thank you for your participation today.